In the recent case of Manolete Partners plc v Hayward And Barrett Holdings Ltd & others  All ER (D) 08 (Jun), the Court reviewed hybrid claims and the practice of issuing hybrid claims by an Insolvency Application. The Chief ICC Judge Briggs highlighted that, “A distinction is to be drawn between an assignment of claims vested in the joint liquidators and capable of assignment, claims vested in the [company] and capable of assignment by the joint liquidators and the office of liquidator. The office of liquidator is not capable of assignment”. Therefore, when issuing proceedings in respect of a s212 misfeasance claim which has been assigned and a s423 claim in any case, these claims may not be brought by an Insolvency Application pursuant to Rule 1.35 of the Rules, but must be brought using Part 7 of the CPR and a Form N1.
Chief ICC Judge Briggs said that he reached these conclusions with regret. He said that the criticisms of the procedure were well made by Counsel, Mr Joe Curl, acting for Manolete Partners plc. He agreed that they do not promote a convenient, sensible or economical use of Court resources. In modern parlance the result fails to ensure that claims of this nature are dealt with expeditiously, allotting an appropriate share of the Court’s resources. An office-holder and assignee of claims will be forced to issue claims arising from an insolvency using different procedures, in different lists within the Business and Property Courts, with a risk that without a transfer they will be case managed, at least, by different judges although the claims arise out of the same facts.
Although in this case the Court exercised its discretion under rule 3.10 of the CPR to allow the claim to continue upon payment of the relevant Part 7 fee, the decision itself has significant implications. First, there is no reason to believe that the same principles do not apply to administrators. Second, there are real costs implications, not just with the issue fee of £10,000 on any claim of or over £200,000 but, also, with the costs associated with Part 7 case management. In many cases, the liquidator(s) may not be in funds to meet either the fee or the ongoing costs of a claim, and the assignment of these causes of action might be the only available option.
If you have any queries about this topic, please contact any member of the Restructuring & Insolvency team.
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